What is Self-employment Really Like?

The CIPD point out that dictionary definitions of self-employment emphasise earning a living from your own efforts rather than by being employed – a clear advantage when employment was associated with the master–servant relationship and employees were prevented from acts of civic responsibility, such as voting, because it was assumed they would do their employer’s bidding. Self-employment has been on the rise again for most of the last 50 years and this is likely to be a continuing trend.

The self-employed work, on average, longer hours than employees although the gap has narrowed since the 1980s because of a fall in average hours worked among the self-employed. More people are self-employed on a part-time basis and there has been a reduction in the proportion of self-employed working long hours. Citizens Advice point out that control over working hours may be more important to the self-employed than the number of hours worked.

Most of the self-employed are sole traders and, where they do employ people, it is in most cases just one or a very small number. The Department for Business, Innovation and Skills (BIS) says that in 2016, 76% of UK registered businesses had no employees, some expected to take on employees during the year but most of those without employees were just not considering it or said they didn’t have enough work.

Many of the self-employed work as freelancers or sub-contractors, where to an extent they fit in with the structure and working practices of the organisations for whom they work. The Recruitment and Employment Confederation reported in 2014 that one in ten adults said they had been a contractor at some point in their life and 11% had been a freelancer. Although they may see themselves as self-employed, such working arrangements may at times fall into the ‘worker’ category.

Self-employed earnings

The earnings of the self-employed are difficult to quantify as data is often not collected. Where data exists, calculation and interpretation is complicated by factors such as which earnings are declared and the working hours of the self-employed; there are self-employed people both with very high and very low earnings. Nevertheless, CIPD evidence suggests that average hourly earnings for the self-employed are lower than for employees. However, they are less likely than employees to be feeling ‘material deprivation’ (defined in terms of lack of goods), perhaps because of income and wealth acquired at other points in the life-cycle.

In 2012, a quarter of the self-employed workforce operated from home and around half worked from a variety of different places, presumably mostly wherever clients or customers were based.

While the self-employed do not place greater weight on pay than employees do, they are less likely to value highly a job’s security, promotion and training prospects, whereas they are more likely to value aspects of the work, such as its variety, and choice over their working hours.

Why it suits some

Despite earnings from work typically being lower than for employees, the self-employed express the same levels of satisfaction with pay as do employees but they are more likely than employees to report high levels of satisfaction with the work itself, its variety and the opportunities it gives. Most of the self-employed are men, but an increasing proportion are women, although women are less likely than men to want to be self-employed.

The self-employed have more autonomy over their work and seem to consciously trade autonomy for earnings with 46% reporting that having more time or flexibility was the main advantage. Areas where the self-employed are in general more content include the nature of the work they do, its variety, and the ability to use their initiative and skills. Analysis by the CIPD Employee Outlook survey suggests that three factors explain this higher job satisfaction: the self-employed are more likely to feel highly motivated by the core purpose of their business (unsurprising as in most cases it’s their business); the self-employed are less likely to feel under excessive pressure on a regular basis; and the self-employed are less likely to feel their work and home lives are not in balance.

The self-employed are also more likely to say that their work leaves them in a positive frame of mind (for example, feeling enthusiastic or optimistic) than employees for much of the time, while being no more likely to report negative feelings. The CIPD sunnily point out that this could be the result of people with a sunnier disposition choosing self-employment rather than being the effect of self-employment on their state of mind.

In short, the self-employed have higher levels of job satisfaction than employees: they derive greater value from the nature of their work and seem to find it easier to manage work pressures and reconcile their business with other aspects of their lives.

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